It’s one thing to understand the technical challenge of combined IP and Optical network management– but it’s quite another to quantify the business benefits.
Appledore recently completed an extensive, independent, business benefits analysis for deployment of an IP/Optical network automation software platform, NetFusion from Sedona Systems. The process is worth understanding because no matter how smart, technical innovation alone doesn’t make a business case.
The reality is that in telecom the return-on-investment proposition for “don’t change anything” can often look pretty strong to a corporate Finance team. It is essential for start-ups and other innovators to understand how to relate their technical innovations to the real operational and business metrics of a CSP. The case for new (or redirected) investment must be evaluated and justified against a model of a CSP’s current and future operations in detail, and with credible baseline of typical data.
Our analysis for Sedona is based on decades of experience working with and for CSPs, understanding their processes and typical metrics for everything from provisioning time to the cost of truck rolls. As networks become more complex, additional human intervention is a critical area of cost to try and avoid. But it is only one part of what makes up a business benefit analysis.
Mix of customers is an important factor – some technologies promise to reduce the number of calls from consumers experiencing problems, or needing to be guided by a human expert through a restoration process. In these cases, the business risk presented by any individual transaction is small, so the business value is based more on avoided labor and potentially a downward nudge on churn.
However, for CSPs with a significant base of enterprise customers, SLA penalties figure more strongly in automation ROIs, as well as accelerated time-to-revenue, as automation can reduce pre-sales and delivery cycles by weeks.
Some more subtle aspects can come into play, for example: what is the warranty cost of network equipment? How much effort is dedicated to managing each individual vendor’s equipment? What is the overall network capacity utilisation, and how do you trade off the value of over-provisioning as an insurance policy against the revenue forgone?
But business benefits are not only about reduced costs. In the field of network software and OSS, the potential to make a positive contribution to revenue can be significant.
A good business benefits analysis looks across both capex and opex and well as revenues, and over a three-year period.
The value of a comprehensive, independent analysis is that it provides a solid framework within which to discuss and prioritise desired business outcomes. In the case of considering sophisticated new capabilities for managing complex, multi-layer networks, that is essential – for CSP and vendors alike.
The full paper can be downloaded (free, with registration) from Sedona Systems’ website.